The Moderating Effect Of Corporate Governance On The Relationship Between R&D And Firm Performance

Science and technology not only makes an enterprise grow, but makes a country prosperous. The competition of science and technology plays an important role in the increasingly fierce market competition and international competition. And the development of science and technology needs to constantly improve the structure of R&D and adjust the direction of R&D. Either from the national level or corporate level, the R&D investment level in China lags far behind the developed areas of the world. Increasing R&D investment is a key step to enhance our international competitiveness. However, the practice has proved that more investment in research and development doesn’t mean better performance. R&D investment has high risks, and its revenue lags behind the investment and it has serious information asymmetry, which makes the R&D activity a serious principal-agent problem. Reasonable corporate governance structure can effectively solve the problem of agency. Therefore, explore the relationship between the R&D and enterprise performance within the framework of corporate governance has an important theoretical and practical significance.The main work of this paper is to explore the moderating effect of the corporate governance on the relationship between R&D and firm performance. At first, we reviewed the documents of the effect of corporate governance on R&D, the relationship between R&D input and firm performance. On the basis of the existing achievements, we presented the principal-agent theory as the basic theory of this paper and then the solution of it——corporate governance theory. Then this paper put forward to hypothesis based on analyzing the agent problem of R&D, the relationship between corporate governance and R&D and the moderating effect of corporate governance on the relationship between R&D and firm performance. Finally, we examined the hypothesis using a sample from the listed companies on Shanghai Stock Exchange and proposed policy suggestion. In empirical study, we used descriptive statistical analysis, multivariate regression analysis, hierarchical regression and subgroup analysis. The conclusions of this paper are as follows:Firstly, the corporate governance did have moderating effect on the relationship between R&D and firm performance. The average age of the Board(BAGE) was a pure moderator, the salary level of the Board(BSAL) and managerial ownership(MO) were quasi moderators, which moderated the direction and form of the relationship between R&D and firm performance and play a direct role. Boarding meetings(BMN) is homogeneous moderator which change the strength of R&D and firm performance relation and play a indirect role. While institution ownership(INO)、Board scale(BS)、 Board ownership(BO)、the average term of the Board (BTER)、independent directors have no moderating effect on the relationship.Secondly, though the institute ownership has no moderating effect on the relationship, it directly and significantly influenced the firm performance, which indicates institutional investors in china are long-term investors. But the proportion is very low, so they can’t influence the firms’decision, which indicates institutional investors are non-active investors. Non-institutional investors have no moderating effect on the relationship, and have no significant influence on the firm performance, which is to say that the commercial relationship between enterprises are fragile and the owners of the listed companies become cautious and conservative and are unwilling to conduct high risk R&D.Thirdly, managerial ownership has moderating effect on the relationship and has a significantly positive influence on the performance. That is to say, we can use it to solve the agency problem.This paper provides some theoretical guidance and empirical experience to optimize the governance structure of China’s listed companies, to improve corporate R&D investment and its output, and to promote company performance eventually.